>>> US close Dow+1.28% S&P+1.39% Nasdaq+1.16% Russell

Closing Market Summary: Dow Jones Leads Stocks Higher

The stock market raced higher on Tuesday with the Dow Jones Industrial Average (+1.4%) pacing the advance while the S&P 500 (+1.3%) followed not far behind. Thanks to the broad-based rally, the S&P 500 erased all of its decline from Monday and then some, settling at its best level since August 28.

Although the Tuesday tone differed greatly from Monday, it is worth noting that trading volume remained relatively light with 760 million shares changing hands at the NYSE floor. That total falls short of yesterday's tally (765 million), representing a notable decline from the 20-day average of more than a billion shares. All things considered, the dynamic is not that surprising as some investors continue sticking to the sidelines ahead of Thursday's policy statement from the Fed and a potential fed funds rate hike.

Economic data released today is unlikely to affect the Fed's decision, but it is worth noting that today's rally began in the futures market shortly after the release of the Retail Sales report for August, which came in just below expectations (+0.2%; consensus +0.3%); however, core sales increased 0.5%, suggesting the presence of some underlying consumption strength.

Stocks followed the report's release with a rally while Treasuries began a daylong retreat. The 10-yr note settled on its low with its yield higher by nine basis points at 2.28%.

All ten sectors posted gains with eight groups adding 1.1% or more. The energy sector (+1.1%) grabbed the lead early on with strength in crude oil futures (+1.2% to $44.65/bbl) supporting the move. The commodity-sensitive sector held a solid gain into the close, but was leapfrogged by several groups in afternoon action.

Most notably, the industrial sector (+1.7%) settled in the lead with transport stocks powering the outperformance. The Dow Jones Transportation Average spiked 1.9% with UPS (UPS 100.52, +3.51) surging 3.6% after announcing plans to hire between 90,000 and 95,000 seasonal employees to support the expected volume increase ahead of the holidays. Another DJTA component, FedEx (FDX 154.00, +3.77) climbed 2.5%.

The industrial sector ended well ahead of the broader market, but other influential groups also held their own. To that point, health care (+1.4%), technology (+1.3%), and financials (+1.4%) spent the bulk of the session ahead of the S&P 500.

With stocks on the rise, investors lifted some of their hedges, sending the CBOE Volatility Index (VIX 22.56, -1.69) lower by nearly two points. That being said, the near-term volatility measure remains elevated by recent standards.

Economic data included Retail Sales, Empire Manufacturing, Industrial Production, and Business Inventories:

  • Retail sales increased 0.2% in August after increasing an upwardly revised 0.7% (from 0.6%) in July while the consensus expected an increase of 0.3% in August
    • The headline 0.2% gain was well below the 0.7% increase in aggregate income that was highlighted in the August employment report, meaning another month of falling gasoline prices has translated into higher savings instead of spending
    • Excluding autos, retail sales increased 0.1% in August after increasing an upwardly revised 0.6% (from 0.4%) in July while the consensus expected an increase of 0.2%
  • The Empire Manufacturing Survey for September registered a reading of -14.7, which was above the prior month's reading of -14.9, but below the consensus estimate, which was pegged at 0.5
  • Industrial Production decreased 0.4% in August, which was worse than the 0.2% decrease expected by the consensus
    • The pullback in industrial production resulted from motor vehicle assemblies returning to more normal trends. Excluding motor vehicles, industrial production was flat in August after increasing 0.3% in July
    • Capacity utilization hit 77.6% while the consensus expected a reading of 77.8%
  • Business Inventories rose 0.1% in July, which is what the consensus expected. This followed the prior month's revised increase of 0.7% (from 0.8%).
    • Manufacturers (-0.1%) and merchant wholesalers (-0.1%) already reported their July results. The only new information was that retailer inventories increased 0.6% in July after increasing 1.0% in June

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, August CPI (consensus -0.1%) will be reported at 8:30 ET, and the September NAHB Housing Market Index (consensus 61) will cross the wires at 10:00 ET.

  • Nasdaq Composite +2.6% YTD
  • Russell 2000 -3.1% YTD
  • S&P 500 -3.9% YTD
  • Dow Jones Industrial Average -6.9% YTD

Reuters - Picky banks play hardball with hedge fund clients

Picky banks play hardball with hedge fund clients


LONDON, Sept 15 (Reuters) - For Jonathan Kinlay, no novice at setting up a hedge fund, this time round was much harder.

In the traditional Grand Tour of investment banks looking for help to finance his trading, he was politely turned down by no less than six for being too small.

The response, says Kinlay, chief investment officer of New York-based Systematic Strategies LLC, was the same at each of them: "We'd love to help you. We know you. Give us a call as soon as you've got $50 million."

Kinlay's experience highlights sweeping changes underway in banks' prime brokerage units, which provide funds with services such as lending money or securities and settling trades.

Mounting regulatory pressure since the financial crisis is prompting banks to cull smaller and poorly paying clients. Many of the funds which do make the cut are being asked to pay more in fees or pump higher-quality business through the bank.

"You're seeing large funds look to consolidate their activity with fewer large primes so they are relevant enough in terms of wallet," said the head of prime brokerage for Europe at a leading investment bank.

But even that is not enough for some.

Credit Suisse Group is reportedly set to scale back its prime brokerage activities after a wide-ranging review by new Chief Executive Tidjane Thaim, who would rather use the capital elsewhere.

As well as raising the bar for hedge fund launches, the changes are also leaving funds open to greater counterparty risk as they are forced to use fewer banks - a sharp reversal of the trend seen in the industry just after the 2008 crisis.

Then, hedge funds - spooked by the collapse of Lehman Brothers - had sought to diversify away from the dominance of Goldman Sachs and Morgan Stanley, giving a chance to rivals such as Deutsche Bank and Credit Suisse to boost market share.

This year, less than 3 percent of hedge funds launched with the help of three or more prime brokers, down from 11.4 percent in 2014 and a high of 14.5 percent in 2008, data from industry tracker Eurekahedge showed.

More than 70 percent of the launches used just one bank, up from 61 percent in 2014 and a low of 55 percent in 2012.

That change mirrors the changing power relationship between the funds and their banks.

For many years, funds received the red-carpet treatment from brokers. Pre-crisis, funds often picked brokers on the basis of a bank's specialism and service offering, while post-crisis there has been a greater focus on diversifying credit risk.

Now, though, the banks are in charge.

"The industry is now in the third phase of the evolution of the prime brokerage-hedge fund relationship, which is about regulatory capital, balance-sheet and liquidity," said Dan Thomas, head of Wells Fargo Securities' client trade services.

Since Basel III rules on leverage began to go live, crimping the amount of balance sheet they could extend to funds, banks have seen the profitability of their prime units slide.

While most just give high-level revenue figures, data from other industry watchers shows the scale of the hit to banks' bottom line by the rule changes.

Data from industry tracker Coalition showed average 2014 return on equity for nine of the top brokers based on risk-weighted asset-based capital was 17.2 percent. Using new leverage rules, the profitability fell to 6.3 percent.

And that trend is likely to get worse as banks brace for the onset in 2016 of Total Loss-Absorbing Capital (TLAC) rules, designed to bullet-proof the industry against future shocks and which will see big banks hit more than their smaller peers.

That flux is proving a boon to cash-rich investment banks such as Wells Fargo, which is ramping up its prime offering and attracting funds rejected or asked to pay more by industry leaders.

ATTRACTIVE FUNDS

Determining which fund is attractive to which bank and at what price is complex. It hinges on a host of factors including the size of the bank, its geographic footprint, the trading flow of both fund and bank and the fund's growth plans.

Among the most attractive fund strategies, in theory, would be those which do not take up much balance-sheet, such as equity market neutral funds or long-short, where a fund bets on stock prices rising and falling.

Less attractive strategies could include less liquid debt markets, or ones which require a bank to take the opposite side of a complex derivatives trade, but it is possible for a fund that looks 'good' for one bank to look 'bad' for another.

"You're seeing hedge funds set up financing desks equivalent to a PB (prime brokerage) house so that they understand how we evaluate the clients, so they can help optimise their activity," the Europe prime brokerage chief said. "Because every prime has a slightly different sweetspot across markets."

While return on equity calculations would differ at each bank, as would where the return came from - financing, execution or custody, for example - most brokers would be "broadly happy" with a return on assets of at least 100 to 125 basis points.

Data from hedge fund tracker Eurekahedge also shows the impact of the shake-up, with traditional prime brokers attracting more assets from bigger hedge funds and second-tier primes building up their business.

Eurekahedge estimates top-5 banks have captured 71 percent of the market, up from 67 percent before the crisis. The next five prime brokers have also increased market share to nearly 20 percent, up from 17 percent before the crisis.

The Europe prime brokerage chief said he thought most big firms - those with more than $5 billion in assets - would likely settle at four or five prime brokers.

The wide-ranging nature of the changes in the industry mean investors are also showing more forbearance, said Graham Rodford, chief operating officer at London-based Omni Partners, which has cut its prime brokers to four from six.

"Investors are also aware that there's pressure on prime brokers and if you tell them that you are consolidating prime brokers, they see it as less of an issue than they did in the past," he said.

"Before, managers were reluctant to appoint a lesser known prime broker. Now investors understand."

>>> SAB Miller shares are sharply up this afternoon - almost 4pc at pixel time.

Coincidence?

{http://betaville123.blogspot.fr/2015/09/coincidence.html}

SAB Miller shares are sharply up this afternoon - almost 4pc at pixel time.

Some readers might be wondering why?

Well, from what I can tell tongues are wagging in the Square Mile amid rumours Altria - the US tobacco company that owns 28pc stake in SAB Miller - has just pulled out of a Bank of America Merrill Lynch industry conference.

The speculation about Altria comes swiftly after the chief financial officer of Anheuser-Busch Inbev, the rumoured bidder for SAB Miller, pulled out of a Barclays conference last week the day before it was supposed to take place.

So, I guess market speculators are...furiously speculating!

(Telegraph) Top 100 world universities 2015/16 – QS rankings

http://www.telegraph.co.uk/education/universityeducation/11863169/Top-100-world-universities-201516-QS-rankings.html}


The QS annual world university rankings were published today, with MIT maintaining its position as the top-ranked university worldwide


The Massachusetts Institute of Technology has retained its position as the top ranked university in the world, according to annual league tables.
The QS World Universities 2015/16 rankings, published today, also saw Harvard rise from fourth place last year to take second spot this year, overtaking the University of Cambridge.
Imperial College London, which was placed joint second last year, slipped to eighth, while the University of Oxford and UCL also fell in the rankings.
However, despite these slips, the UK has maintained its reputation for world class higher education. London, in particular, performed strongly, as the only city in the world with four universities in the top 50, more than Boston and New York (3) Paris, Sydney, Hong Kong and Beijing (2).
Boris Johnson, the Mayor of London, praised institutions in the Capital, saying the city was the "education capital of the world."
"The city’s education sector is going from strength to strength," he said. "Attracting the world’s top talent and producing the next generation of great thinkers and leaders."

The QS top 100 world universities

View the complete rankings: Top 800 universities
1. Massachusetts Institute of Technology (MIT)
2. Harvard University
3= University of Cambridge
3= Stanford University
5. California Institute of Technology (CALTECH)
6. University of Oxford
7. UCL (University College London)
8. Imperial College London
9. Eth Zurich (Swiss Federal Institute of Technology)
10. University of Chicago
11. Princeton University
12. National University of Singapore (NUS)
13. Nanyang Technological University (NTU)
14. École polytechnique fédérale de Lausanne (EPFL)
15. Yale University
16. Johns Hopkins University
17. Cornell University
18. University of Pennsylvania
19= Australian National University (ANU)
19= Kings College London KCL)
21. University of Edinburgh
The University of Edinburgh
22. Columbia University
23. École normale supérieure, Paris (ENS Paris)
24. McGill University
25. Tsinghua University
26. University of California Berkeley, Berkeley (UCB)
27. University of California, Los Angeles (UCLA)
28. The Hong Kong University of Science and Technology (HKUST)
29. Duke University
30= University of Michigan
30= University of Hong Kong (HKU)
32. Northwestern University
33. University of Manchester
34. University of Toronto
35. London School of Economics and Political Science (LSE)
36. Seoul National University (SNU)
37. University of Bristol
38. Kyoto University
39. The University of Tokyo
40. Ecole Polytechnique Paristech
Imperial College London Photo: Alamy
41. Peking University
42. The University of Melbourne
43. KAIST – Korea Advanced Institute of Science and Technology
44. University of California, San Diego (UCSD)
45. The University of Sydney
46= The University of New South Wales (UNSW)
46= The University of Queensland (UQ)
48. University of Warwick
49. Brown University
50. University of British Columbia
51= The Chinese University of Hong Kong (CUHK)
51= Fudan University
53. New York University (NYU)
54. University of Wisconsin-Madison
55. University of Amsterdam
56. Tokyo Institute of Technology
57. City University of Hong Kong
58. Osaka University
59. University of Illinois at Urbana-Champaign
60. Technische Universitat Munchen
London School of Economics and Political Science Photo: Alex Sagre
61. Durham University
62= Carnegie Mellon University
62= University of Glasgow
64. Delft University of Technology
65. University of Washington
66. Ruprecht-Karls-Universitat Heidelberg
67. Monash University
68. University of St Andrews
69. University of Copenhagen
70= National Taiwan University (NTU)
70= Lund University
70= Shanghai Jiao Tong University
70= University of Nottingham
74. Tohoku University
75. Ludwig-Maximilians-Universitat Munchen
76. University of Birmingham
77. University of Texas at Austin
78. Trinity College Dublin (TCD)
79. University of North Carolina, Chapel Hill
80. University of Sheffield
King's College London Photo: Alamy
81. University of Southampton
82= The University of Auckland
82= Katholieke Universiteit
84. Georgia Institute of Technology (Georgia Tech)
85= University of California, Davis (UCD)
85= University of Zurich
87= University of Leeds
87= Pohang University of Science and Technology (POSTECH)
89= Purdue University
89= University of Geneva
91. Boston University
92. KTH, Royal Institute of Technology
93. KIT, Karlsruher Institute Fur Technologie
94. Utrecht University
95. Leiden University
96= University of Helsinki
96= University of Alberta
98. The University of Western Australia (UWA)
99. Ohio State University
100. University of Groningen

(BofA-ML) Big private client-led Energy inflows

Big private client-led Energy inflows

* Third week of net buying, led by private clients
Last week, during which the S&P 500 rebounded 2.1%, BofAML clients were net buyers of
US equities in the amount of $0.99bn. This was the third consecutive week of buying by
our clients, but in smaller magnitude than the previous two weeks. Similar to the prior
week, net buying was led by private clients, and hedge funds were also net buyers for the
fourth consecutive week. Institutional clients were net sellers for the second week in a
row. Net buying last week was entirely in large caps, as both small and mid-caps saw
muted sales. Buybacks by corporate clients decelerated for the second week, but remain
elevated—the four week average is the highest in 18 months. Overall, BofAML clients’
flows on a four-week average basis are their highest since January. Buybacks on an
annualized basis YTD are still tracking slightly below 2014 levels.

* Near-record Energy inflows, led by private clients
Last week, flows into US stocks by our clients were largest in the Energy sector, where
inflows were the largest since January and the fifth-largest in our data history, despite the
retreat in oil prices following their late-August rebound. Inflows were chiefly from private
clients, whose net buying of Energy stocks last week was the largest in our data history
(following record net sales of the sector in mid-August)—see chart below. Discretionary
and Health Care stocks saw the next-largest net buying by our clients last week, and ETFs
also saw inflows. Clients sold the other seven sectors, led by Financials and Tech.
Discretionary currently has the longest net buying trend with inflows during the last five
weeks; no sector has seen more than two consecutive weeks of net selling. Financials
notably saw outflows by our clients last week for only the second time in eleven weeks,
which could suggest clients are less confident the Fed will raise interest rates this month.

* Other notable flows: bifurcated Industrials flows
• Consumer Staples, Tech and Financials saw net sales by private clients, hedge funds
and institutional clients alike last week. No sector saw net buying by all three groups.
• Industrials saw bifurcated flows last week, with near-record levels of net buying by
hedge funds but near-record levels of net selling by institutional clients. (Private
clients were small net buyers of the sector).
• Pension fund clients were net buyers of US stocks last week for the seventh
consecutive week. Net buying was chiefly due to Health Care stocks; Energy and
Industrials saw the biggest net sales. This group remains a net buyer of stocks on a
cumulative basis YTD. See pg. 9 for details

>>> Two Chilling Demographic Charts Every Investor Needs to See



Bottom line is that global population growth is decelerating at its fastest rate since the early to mid 1990’s. Based on historical precedent, another leg down in global growth is likely to follow.

Here’s another huge secular headwind (Demographic Chart) investors need to see.


These two charts are the bull case for long-duration bonds which we have been (successfully) long for some time now. On a related note, the next bull case for stocks is #GrowthSlowing perpetuating the “need” for more Fed cowbell, bailouts, etc.

>>> Herbalife : Pershing Square issues commentary, sees similiarities with Vemma

Pershing Square issues commentary, sees similiarities with Vemma Nutrition 

- Pershing sees significant structural similarities between Herbalife Ltd. (Herbalife) and Vemma Nutrition Company (Vemma), the multilevel marketing company that has been halted and whose assets have been seized by a federal court at the request of the Federal Trade Commission for being an alleged pyramid scheme. The FTCs move to shut down Vemma is reassuring for consumers but should worry Herbalife.

- Pershing: Herbalife is an enormous pyramid scheme and its structure parallels Vemma and other fraudulent companies that the FTC has already shut down, including Fortune Hi-Tech Marketing which was shut down in January 2013. In the case of Vemma, the FTCs complaint concerns many fundamental aspects of Vemmas business that are integral to Herbalifes business model

- Provides an example:
Income claims. Both Herbalife and Vemma seriously misrepresent the potential for income:
* The bottom 93% of Vemma Affiliates earned less than $6,169/year. The FTC alleges: [Vemma] claim[s] affiliates can earn substantial income by enrolling others either as affiliates or as customers, but Vemma focuses on recruitment rather than retail sales of its products to generate this income. The vast majority of participants make no money, and most of them lose money.
* The bottom 94% of Herbalife Sales Leaders earned less than $2,245/year. Herbalife bills itself as the best business opportunity on the face of the earth and promises its recruits vast sums of money, but in reality 89% of distributors receive $0 in gross compensation. In 2014, nearly 2 million members churned through Herbalife. 90% of non-sales leaders fail annually.